December 15, 2018 by Akshay Makadiya
Japan’s top financial regulator the Financial Services Agency (FSA) has moved toward specifically categorizing bitcoin and other cryptocurrencies as “crypto-assets.” That designation reportedly comes so Japanese citizens know clearly these assets aren’t government-backed legal tender.
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Talking About Legal Tender: Splitting Hairs
An FSA advisory panel submitted a review on December 14th that formally requested the agency change how cryptocurrency is legally referred to in Japan, domestic news agency Yomiuri Shimbun has reported.
The panel, citing concerns over citizens potentially misunderstanding the generic phrase of “virtual currency,” has proposed designating cryptocurrencies specifically as “crypto assets” to avoid any possible ambiguity.
Accordingly, the FSA will now review and modify relevant legislation to implement the requested update.
Last year, the Japanese government amended its Payment Services Act to allow virtual currencies as forms of payment.
However, the Payment Services Act defined cryptocurrencies as “property value,” which could be used to purchase goods and services but was not considered government-backed legal tender. The new language update will be aimed at even further legal clarity.
The Crypto Assets Name Game
Generally speaking, the crypto-friendly Japanese government has been ahead of the curve when it comes to embracing the cryptoverse.
That government now finds itself in the midst of what many other administrations are currently grappling with: how to legally classify cryptocurrencies.
Much ado about names may seem silly, but each specific legal designation carries different legal implications in any jurisdiction, e.g. securities, commodities, property, money, etc.
For example, the central bank of South Africa, the South African Reserve Bank, recently chose to refer to virtual currencies as “cyber-tokens” as the bank argued such tokens have no traits of money.
“We don’t use the term ‘cryptocurrency’ because it doesn’t meet the requirements of money in the economic sense of the stable means of exchange, a unit of measure and a stable unit of value,” the reserve bank’s Deputy Governor Francois Groepe said at the time.
Earlier this year, Anatoly Aksakov, a member of National Banking Council of Central Bank of Russia, said that the draft regulations for the crypto space will domestically refer to virtual currencies as “digital rights.”
Aksakov emphasized that terms such as cryptocurrencies, digital currency, and digital money will disappear in the nation. For now, that remains to be seen.
How does the categorization of virtual currencies impact the crypto space? Share your views in the comments section.
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